Retailer expects lower inflation, rate cuts and implementation of the two-pot system to buoy disposable income and discretionary spending
21 November 2024 - 08:26
by Jacqueline Mackenzie
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Mr Price has reported a 7% rise in earnings at the halfway stage as it gained market share despite the “challenging” conditions, particularly in the first quarter.
The group increased total revenue by 5.2% to R17.6bn for the 26 weeks ended September 28. The group gained 60 basis points of market share, as its retail sales growth of 5.1% outperformed the comparable market’s sales growth of 2.2%, Mr Price said in a statement on Thursday.
The market warmed to the results with the company’s share price jumping the most since May 2021, up 8.64% to R295.69, giving it a market cap of R76bn.
Comparable store sales increased 0.4%. Group store sales increased 5.1% and online sales 4%.
For closer look at the performance, Business Day TV caught up with Sasfin Wealth's senior equity analyst, Alec Abraham.
The store footprint at the end of the period closed at 2,958 outlets, increasing by 92 new stores across the group’s 15 trading chains. On November 27, the group will open its 3,000th store.
Cash sales constituted 88.1% of group retail sales, while credit sales growth of 2.7% reflects prudence in extending new credit accounts in the current environment.
Demand for credit from consumers remained high as new account applications increased by 32.6%, however, the approval rate of 19% was appropriate based on customer affordability constraints, it said.
Headline earnings per share (HEPS) of 481.8c were up 7.1%, while diluted HEPS grew 6.5% to 468c. Profit from operating activities increased 4% to R2bn and attributable profit was up 7.3% to R1.24bn.
An interim dividend of 303.6c per share was declared, up 7.1%.
While there were macroeconomic positives of no load-shedding, increased political stability and a stronger rand, the earnings performance was reflective of the continued constraint on consumer affordability levels, it said.
The group gained market share in five out of six months, only losing share in the highly promotional month of July as competitor winter merchandise was discounted. It has now gained market share for four consecutive quarters.
“The financial year started with a very challenging first quarter, impacted by a contraction in the economy caused by uncertainty prior to the national elections and the late onset of winter,” said CEO Mark Blair.
“We are very satisfied with our overall market share performance, which was supported by higher gross margins in all three trading segments,” he said.
The group’s increasing sales momentum in the second quarter and the strong start in the second half. The 12.4% increase in sales in the first seven weeks was encouraging and could hopefully be viewed as a sign that SA was entering an upward economic cycle, he said.
The group expects the economic and consumer pressures experienced in the first half to begin to ease. Lower inflation, interest rate cuts and the implementation of the two-pot retirement system would buoy disposable income and discretionary spending, it said.
All its trading segments delivered double-digit growth in the seven-week period to November 16, it noted.
The festive trading period is a key time in the retail trading calendar and the group has planned its festive season inventory intake early to mitigate supply chain risks and ensure that it has optimal stock levels.
The company remains debt free and is well positioned to capitalise on an improving consumer environment.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Mr Price weathers ‘challenging’ first half
Retailer expects lower inflation, rate cuts and implementation of the two-pot system to buoy disposable income and discretionary spending
Mr Price has reported a 7% rise in earnings at the halfway stage as it gained market share despite the “challenging” conditions, particularly in the first quarter.
The group increased total revenue by 5.2% to R17.6bn for the 26 weeks ended September 28. The group gained 60 basis points of market share, as its retail sales growth of 5.1% outperformed the comparable market’s sales growth of 2.2%, Mr Price said in a statement on Thursday.
The market warmed to the results with the company’s share price jumping the most since May 2021, up 8.64% to R295.69, giving it a market cap of R76bn.
Comparable store sales increased 0.4%. Group store sales increased 5.1% and online sales 4%.
For closer look at the performance, Business Day TV caught up with Sasfin Wealth's senior equity analyst, Alec Abraham.
The store footprint at the end of the period closed at 2,958 outlets, increasing by 92 new stores across the group’s 15 trading chains. On November 27, the group will open its 3,000th store.
Cash sales constituted 88.1% of group retail sales, while credit sales growth of 2.7% reflects prudence in extending new credit accounts in the current environment.
Demand for credit from consumers remained high as new account applications increased by 32.6%, however, the approval rate of 19% was appropriate based on customer affordability constraints, it said.
Headline earnings per share (HEPS) of 481.8c were up 7.1%, while diluted HEPS grew 6.5% to 468c. Profit from operating activities increased 4% to R2bn and attributable profit was up 7.3% to R1.24bn.
An interim dividend of 303.6c per share was declared, up 7.1%.
While there were macroeconomic positives of no load-shedding, increased political stability and a stronger rand, the earnings performance was reflective of the continued constraint on consumer affordability levels, it said.
The group gained market share in five out of six months, only losing share in the highly promotional month of July as competitor winter merchandise was discounted. It has now gained market share for four consecutive quarters.
“The financial year started with a very challenging first quarter, impacted by a contraction in the economy caused by uncertainty prior to the national elections and the late onset of winter,” said CEO Mark Blair.
“We are very satisfied with our overall market share performance, which was supported by higher gross margins in all three trading segments,” he said.
The group’s increasing sales momentum in the second quarter and the strong start in the second half. The 12.4% increase in sales in the first seven weeks was encouraging and could hopefully be viewed as a sign that SA was entering an upward economic cycle, he said.
The group expects the economic and consumer pressures experienced in the first half to begin to ease. Lower inflation, interest rate cuts and the implementation of the two-pot retirement system would buoy disposable income and discretionary spending, it said.
All its trading segments delivered double-digit growth in the seven-week period to November 16, it noted.
The festive trading period is a key time in the retail trading calendar and the group has planned its festive season inventory intake early to mitigate supply chain risks and ensure that it has optimal stock levels.
The company remains debt free and is well positioned to capitalise on an improving consumer environment.
mackenziej@arena.africa
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.